Former Startup Founder Charged by Prosecutors for Defrauding JPMorgan Chase | Hacker News Reader

Former Startup Founder Charged by Prosecutors for Defrauding JPMorgan Chase

nytimes.com

3 pointsrbrown4 comments

Good. Fraud cannot afford to pay. As a Miami resident, the more people here that get busted for fraud, the better - this city has a reputation for allowing and enshrining fraud, so anyone getting taken down is a good thing.

That said, I've said it before, but JPM's Risk Management team and Due Diligence teams must suck. How on earth was this fraud allowed to happen? If you're plopping down that kind of money on anything, you need to do proper due diligence, period. I don't care if it misses out on a potential investment because it was too busy making sure said investment wasn't a scam. I also don't care if it doesn't meet some arbitrary goal of investing in a certain number of (or certain $$ amount in) minority-ran/founded companies - I'd vastly prefer that it pay me a higher interest rate on my deposit, or better yet, not loose nearly $200 million dollars on a fucking fraud.

Agreed. Apparently they didn't realize how many emails bounced (i.e. were fake) until way after acquisition

Which is just fucking insane to me. You're a bank with $4 trillion AUM. That's unfathomably large. You want to spend hundreds of millions on an acquisition and you don't bother to do basic risk assessment or due diligence to make sure what you're buying is legit?

The amount of time and money to do so is minuscule, literally fractions of pennies on the dollar in comparison (probably even less!). What were they thinking? Who the hell signs off on this sort of thing? Why haven't they lost their job? What punishments has the bank been given to offset the money lost? Shareholders nor account holders have been compensated for such a waste.

A bank's job is risk management. JPMC's risk management is apparently shit at their job when it comes to making investments into anything besides shares of other banks.

Charlie Javice, the 31-year-old start-up founder who JPMorgan Chase accused in a December lawsuit of lying to the bank as it prepared to acquire her company, is now facing criminal charges as well.

On Tuesday, the U.S. attorney’s office for the Southern District of New York charged her with wire, bank and securities fraud. It said that she “falsely and dramatically” exaggerated the number of customers that Frank, her now shuttered college financial planning company, actually had in a scheme to “fraudulently induce J.P. Morgan Chase to acquire” her start-up for $175 million.

JPMorgan had made similar accusations after acquiring Frank, which claimed to help millions of students and families more easily file for financial aid.

Ms. Javice, a Miami Beach resident, was arrested on Monday evening at Newark Airport in New Jersey.

Three of the charges she faces each carry a maximum sentence of 30 years in prison. A spokesman said that she denied the allegations. Her lawyer, Alex Spiro, declined to comment, as did JPMorgan.

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